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One of the major economic issues faced by the country is agriculture as this is the sector which is source of livelihood for about 54% of Indians till date. Still today this sector is not well developed and faces lots of problems resulting into low productivity of crops.
As 43% of land in India, is used for farming but contributes only 18% of the nation’s GDP. The poor condition of agriculture in the country is the point of concern for Indians. The rural farmers in India suffer from poverty and most of them are illiterate so there is lack of good extension services.
Another major problem faced by Indian farmers is their dependency on nature and poorly maintained irrigation systems. Current agricultural practices are neither economically nor environmentally sustainable and India's yields for many agricultural commodities are low.
Poorly maintained irrigation systems and almost universal lack of good extension services are among the factors responsible. Poor roads to market from village, rudimentary market infrastructure, and excessive regulation are few of the other concerned points for the agriculture sector in India.
The low productivity in India is a result of the following factors:
According to World Bank's "India: Priorities for Agriculture and Rural Development", India's large agricultural subsidies are hampering productivity-enhancing investment. Over regulation of agriculture has increased costs, price risks and uncertainty. Government intervenes in labor, land, and credit markets. India has inadequate infrastructure and services. World Bank also says that the allocation of water is inefficient, unsustainable and inequitable. The irrigation infrastructure is deteriorating.
Illiteracy, general socio-economic backwardness, slow progress in implementing land reforms and inadequate or inefficient finance and marketing services for farm produce.
Very small (less than 20,000 m²) size of land holdings due to fragmentation, land ceiling acts and family disputes. Such small holdings are often over-manned, resulting in disguised unemployment and low productivity of labor.
Illiteracy of farmers and their ignorance in the field of modern agricultural practices and technology, hampered by high costs and impracticality in the case of small land holdings.
Inadequate Irrigation facilities and dependence of farmers on monsoon season, where good monsoon results in a vigorous growth while a poor monsoon leads to a sluggish growth for the economy as a whole. Farm credit is regulated by NABARD, which is the statutory apex agent for rural development in the subcontinent.
Ministry of Agriculture is also working in direction to improve the conditions of farmers by employing different programs like Insurance plan and ITC Limited plan. Under Insurance plan Agriculture Insurance Company of India insures farmers cultivating wheat, fruit, rice and rubber in the event of natural disasters or catastrophic crop failure, under the supervision of the Ministry of Agriculture.
ITC Limited plan aims to connect 20,000 villages to the Internet by 2013 providing provide farmers with up to date crop prices for the first time, which should minimize losses incurred from neighboring producers selling early and in turn facilitate investment in rural areas.